A New Wealth Management Dimension

The CharitableCapital ᵀᴹ Gift Annuity Program

The Reinsurance of Gift Annuities

What is a Charitable Gift Annuity?

A charitable gift annuity is a contractual arrangement  between a donor and a charity. The donor makes an irrevocable gift in exchange for fixed payments for life. The charity issues the gift annuity agreement and places the donated funds into a separate account on behalf of the named annuitant. The charity can then either self-insure or reinsure its payout obligation while making the stipulated payments to the annuitant for life.

What Makes Our Program Unique?

The Program allows charities the opportunity to reinsure their gift annuity payout obligations with selected insurance companies so that the remainder of the gift is available immediately. The Program also allows charities to take advantage of the perpetual, cost-free planned giving capabilities of financial services professionals.

What is Reinsurance?   

The purchase of a single premium immediate annuity contract by a charity from an insurance company. The insurance company guarantees that the lifetime payments which the charity has obligated itself to through a gift   annuity agreement will be paid directly to the charity on the same periodic basis as the payout obligation which the charity has made to the named annuitant. The remainder, the amount donated less the reinsurance premium, is available to the charity immediately.

Reinsurance - Government Regulations

Governmental regulations require charities which self-insure gift annuities to reserve 100% of the risk, effectively restricting the use of the remainder of the amount contributed until the annuitant’s death. However, in most states, should 100% of the gift annuity risk be reinsured by an authorized insurance company, no reserves are required.

Supplemental Retirement Payout Example

A “CD” Alternative?  Donor/Annuitant - Male, Age 75; Contribution: $100,000

Certificate Of Deposit

No Income Tax Deduction.

All interest income is 100% taxable as ordinary income.

The interest rate is relatively low.
Sale of a capital asset to purchase the CD may generate capital gains taxation.

No charitable intent is setisfied.

FDIC Insured.

Principal may be available for use.

At death, heirs may receive the principal.

Gift Annuity

Substantial income tax deduction of $41,015(2)

A large potion of the annual payment is tax free: 82% ($4,756)(1)(3)

The payout is relatively high: 5.8% ($5,800)(3)

Sale by the charity of a donated capital asset can minimize capital gains taxation.(4)

Charitable desires can be satisfied.

Not FDIC Insured.

Access to the value of the gift is no longer possible.

Empowering Charities to create and use new planned giving $$$ immediately.

Empowering Donors to create and use new cash flow to satisfy other financial needs.


Creating and Using New Planned Giving $$$ Immediately

•  Perpetual planned giving opportunities through our National Financial Advisory Network

•  New funds made available immediately

•  Minimal administration costs

•  Access to our portfolio of quality insurance companies

•  Establishes new “advisor” relationships

•  Generates new untapped donor opportunities

1)  Based on a single annuitant charitable gift annuity and ACGA rates as of 1/1/2012 for age at  income commencement, adjusted for deferral, if any.
2)  Assumes a 28% Tax Bracket.  Annuity exclusion ratio.
3)  Based on 1.6%
4)  Assumes a 4 yr. accelerated payout is exercised by annuitant.
5)  May be subject to gift tax.
6)  Annuity payments are part return of principal (non-taxable), part capital gain (if any) and part ordinary income. Once principal is recovered  and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income. If certain requirements are met, the  donor may recognize any capital gain ratably over the  time period the annuity is expected to be received. Assumes a 15% capital gains tax rate.
7)  Insured using a single premium immediate annuity product.